On May 25, Brent July futures were trading at $76.95 per barrel on the London-based ICE Futures Europe exchange, from $76.55/bbl on May 18.

Dubai front month crude oil (Platts) financial futures for June settled at $76.78 per barrel on the CME on May 24, from $75.18/bbl on May 17.

A number of base oil plants were currently undergoing turnarounds or will be taken off-line in coming weeks, limiting spot supplies. In Northeast Asia, a South Korean Group II and Group III producer has scheduled an extended turnaround which was expected to start this week. South Korean exports appeared to have generally slowed down, with fewer fixtures emerging over the last few days, although a number of shipments were discussed for export earlier this week. A 4,000-metric ton parcel made up of two grades was quoted for shipment from Yeosu or Ulsan to Hamriyah, United Arab Emirates, in first half June. A 3,500-ton lot was discussed for lifting in Onsan to Merak and Jakarta, Indonesia, the first week of June. A 3,000-ton cargo was expected to be shipped from Yeosu to Koh Sichang, Thailand, in mid-June. A 2,000-ton parcel was likely to be shipped from Ulsan or Yeosu to Manila, Philippines, in the first half of June.

A Japanese refiner was scheduled to start a two-month turnaround at its refinery in May as well, which was likely to affect Group I base oil output and limit availability from the producer. A second Japanese producer will be completing a turnaround that started in April and will conclude in June, which will affect Group II output.

The sole Taiwanese Group II producer was expected to complete some refinery maintenance in June and July, but this was not expected to affect base oil output significantly. Although happening much later this year, the same producer will have a turnaround at its base oils plant in October and was expected to start building inventories ahead of the shutdown, curbing its spot sales. There were also expectations of fewer volumes being shipped by the supplier to China in the coming months. Demand for the heavier grades that China typically imports in large quantities from Taiwan has weakened. The supplier was heard to have lowered its export prices for June in order to attract interest from other prospective buyers.

A couple of large Chinese Group II plants were expected to be restarted this month, following planned shutdowns, but some units were running at reduced rates due to market economics. The expected strong economic recovery in China after the lifting of strict COVID-19 restrictions has fallen short of the mark, although activity in the industrial segment was healthier than in the previous three years. Nevertheless, some sectors such as the automotive and real estate development were weaker than anticipated. This has led to a slowdown in raw material requirements and a cautious attitude towards purchases.

Chinese consumers were acquiring mostly domestic base oils, which has been one of the government’s goals for several years, in lieu of having the country rely so heavily on imported base oils. Still, China has a deficit of the heavy-viscosity grades, particularly bright stock, and importers are often on the lookout for import opportunities. At the moment, however, they were trying to find a home for cargoes imported earlier in the year, and this has proven somewhat challenging as demand from various lubricants segments has not been particularly strong. A couple of transactions were discussed in shipping circles that involved different destinations in China, with a 2,000-ton parcel mentioned for lifting in Onsan, South Korea, to Zhangjiagang and Jinjiang for late June arrival. A 1,000-ton lot was quoted for shipment from Malacca, Malaysia, to Tianjin in early June.

In Southeast Asia, a large facility in Singapore was undergoing maintenance of some of its base oil trains from the end of April until late June, affecting mostly Group II supply. Recent maintenance and unplanned outages at a couple of Indonesian plants have also resulted in reduced availability of Group I base stocks, particularly bright stock.

A current turnaround at a Group III facility in Europe was not expected to affect supply of base oils to the European Union or other regions for that matter, as the producer’s affiliate plant in South Korea was thought to be producing additional volumes to supplement the European market during the turnaround as needed.

In India, buying interest for imports has slowed down because there were expectations of plentiful supplies arriving from the U.S., Southeast Asia and the Middle East in the coming months.

U.S. suppliers have concluded several transactions given that demand in the U.S. has been lackluster and there was a surplus of light grades. A key U.S. Group II base oil plant will be undergoing a turnaround for most of June, but at least two other suppliers were heard to be in possession of plentiful supplies. Several U.S. cargoes were scheduled to arrive in June and July, while a large cargo was concluded last week for August arrival. About 10,000 tons of different base oil grades, combined with xylenes, were also discussed for shipment from Singapore to Mumbai, Hazira and Karachi, Pakistan, in the first half of June. A 6,000-ton lot was anticipated to load in Rayong, Thailand, for discharge in Mumbai, Hazira or Kandla at the end of May. A 1,500 to 2,000-ton cargo of two grades was anticipated to be shipped from Malacca, Malaysia, to West Coast India in the first half of June. Between 8,000 tons and 12,000 tons were expected to be loaded in Daesan and/or Pyongtaek to West Coast India in late June.

Whether the Indian market would be able to absorb additional volumes was a question, as the start of the monsoon season in June typically leads to a weakening of base oil and lubricants consumption. Expectations of a potential price softening also curbed buying enthusiasm, with consumers counting on receiving sufficient contract shipments and largely avoiding spot purchases on hopes that prices would soften later.

Spot base oil price assessments in Asia were steady to softer, with some grades showing small downward price adjustments as offers were lowered. The price ranges portrayed below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were unchanged from the previous week. Spot prices for the Group I solvent neutral 150 grade were steady at $920/t-$950/t, and the SN500 at $1,020/t-$1,060/t. Bright stock was hovering at $1,260/t-$1,300/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed at $1,010/t-$1,050/t, and the 500N at $1,040/t-$1,090/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed down by $10/t at $740/t-$780/t, but the SN500 was steady at $870/t-$910/t. Bright stock prices edged down by $10/t to $1,000/t-1,040/t, FOB Asia.

The Group II 150N was slightly lower by $10/t at $890/t-$930/t FOB Asia, and the 500N and 600N cuts also edged down by $10/t to $930/t-$970/t, FOB Asia.

In the Group III segment, prices were steady. The 4 centiStoke was hovering at $1,520-$1,550/t, while the 6 cSt was assessed at $1,490/t-$1,530/t. The 8 cSt grade was heard at $1,110-1,150/t, FOB Asia, for fully approved product.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com. 

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.